Earlier this year, the European Commission (EC) sent a Statement of Objections (formal complaint) to Google for violating European antitrust (competition) laws. In particular, the EC alleges Google “has abused its dominant position in the markets for general internet search services in the European Economic Area (EEA) by systematically favouring its own comparison shopping product in its general search results pages. The Commission's preliminary view is that such conduct infringes EU antitrust rules because it stifles competition and harms consumers.”
Yesterday, Google responded to the EC's complaint with a 100 plus page defiant response and blog post. Interestingly, Google did not request a hearing on the matter and this tactic has provided credibility to Google's opponents' claims that if Google is confident that its legal position is correct as a matter of law it would request a hearing to defend itself. A spokesman for the EC told Bloomberg News that "[i]t's common for companies to ask for an oral hearing but it doesn't happen all the time".
In my experience, guilty parties generally hide behind written submissions and avoid direct confrontation with their accusers. According to Bloomberg News, "[h]earings can make a difference. Thirteen of the world's biggest banks succeeded at a face-to-face confrontation last year to unsettle an EU case into the credit-default swaps market...No fines have been issued in that case." Therefore, Google's refusal to face the EC in an oral hearing indicates to me that it believes it has violated European competition law.
Google's cavalier behavior over the years in regards to competition, privacy, and accepting illegal ads clearly demonstrates that it believes its above the law. Since the EC opened its antitrust investigation into Google, the company has paid hundreds of millions of dollars in fines and settlements due to illegal behavior. In each of these situations, Google has dragged its heels when it was caught intentionally misleading regulators, and/or consumers, and/or the media.
In 2011, Google paid a $500 million fine for knowingly accepting illegal advertisements from Canadian pharmacies. Subsequently, it paid multiple million dollar fines in the United States and in Europe for privacy violations in connection with its Street View data collection project, its Buzz social network, its 2012 privacy policy change, and the Safari hack incident.
Illegally abusing market position in Internet search (and/or other areas) is intertwined with data collection, usage, and privacy issues because in order to receive the most "relevant" search results to a search query a search engine must be able to access and process voluminous amounts of data very quickly. For years, 90% to 96% of Google’s revenue has come from advertising which means it is dependent upon being able to obtain massive amounts of personal information at a low cost to feed its behavioral advertising machine.
Countries have different legal criteria when determining whether a company has violated antitrust laws or if a potential merger will create an anti-competitive market. Europe has a long history in regulating anti-competitive markets. Since Roman times, the continent has regulated commerce to ensure competition and fair play. The EC is not targeting Google out of nationalistic fervor to boost EU based companies. Google is being targeted because it is clearly utilizing its dominant position to violate antitrust laws.
The EC has actively enforced its competition laws for years. Last year, a $1.44 billion dollar fine against Intel was upheld for anti-competitive behavior after at least a fiver year plus fight. In 2013, Microsoft was fined $731 million dollars for not adhering to its previous antitrust agreements. So, why does Google think they are are above the principles that have governed European markets for more than 2000 years?
My hope is that the EC utilizes all of the legal and regulatory tools at its disposal to ensure that Google and other companies that violate EC competition and privacy laws are held accountable. Internet users around the globe are harmed when companies such as Google violate antitrust laws.
Copyright 2015 by the Law Office of Bradley S. Shear, LLC. All rights reserved.
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